Inditex: Estimates reduced following a company contact
SELL, Fair Value EUR98 vs. EUR100 (-2%)
2013-15e EPS estimates cut by 3%. We now factor into our 2013 sales estimate a 1% negative FX impact as a result of the Euro’s strength against a basket of currencies (Yen, Brazilian Real, Rouble and Sterling, partly offset by currencies like the Mexican Peso and Polish Zloty). Our estimate of +3% LFL growth is unchanged. Our 2013 gross margin estimate comes in at 59.5% (vs. 60% previously; and vs. 59.8% in 2012), partly as a result of the negative FX impact. As a reminder, the company is guiding for a flat gross margin in 2013 (defined as +/- 50bps). We factor in a flat EBIT margin in 2013 at 19.5% given slight operating leverage and reverse FX impact on the cost base.
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